UnitedHealth Group’s Optum subsidiary announced on Wednesday it will acquire Change Healthcare in a deal that values the Nashville-based health tech company at approximately $8 billion.
Optum will pay $25.75 per share in cash, up 41% over Change Healthcare’s final closing price on Tuesday of $18.74. A Change Healthcare spokesperson said the deal includes $5 billion in debt owed by the company, bringing its total value to $13 billion.
Change Healthcare will join OptumInsight to provide data analytics, revenue cycle management and payment processing capabilities.
Optum aims to integrate its billions of claims data and automated payment processing tool with Change Healthcare’s intelligent healthcare network to more quickly process payments for providers and more transparently bill payers and patients. The company also plans to integrate Change Healthcare’s patient engagement tool—which reaches more than 200 million individuals per year—with individuals’ health benefits, to make it easier for consumers to take advantage of incentive programs that reward healthy behaviors.
Optum CEO Andrew Witty, who also serves as president of UnitedHealth Group, added that Change Healthcare will also offer clinicians immediate, analytical insight on how best to care for individual patients.
“Together we will help streamline and inform the vital clinical, administrative and payment processes on which healthcare providers and payers depend to serve patients,” Witty said in a statement.
At the end of its most recent third quarter ended Sept. 30, OptumInsight accounted for $2.76 billion in revenue, up from $2.61 billion during the same period in 2019. It accounted for about 4% of the company’s total overall earnings. That includes revenue from outside clients as well as “affiliated customers” within UnitedHealth Group. OptumInsight generated the smallest amount of revenue for Optum during that period.
UnitedHealth Group expects Change Healthcare to increase its earnings per share by up to $0.50 by 2022.
Neil de Crescenzo, president and CEO of Change Healthcare, will lead OptumInsight once the acquisition closes. The agreement is expected to close in the second half of 2021 and is subject to Change Healthcare shareholders’ and federal regulators’ approval.
Private equity funds affiliated with The Blackstone Group, which owns 20% of Change Healthcare, have agreed to the acquisition.
“This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system,” de Crescenzo said in a statement.